Livestreaming is transforming the e-commerce industry by enriching consumers’ online shopping experience and boosting sales. However, anecdotal evidence suggests that livestreaming may also increase product returns. To explore this issue, we study the impact of livestreaming adoption on product return rates using a natural experiment: the introduction of livestreaming on Alibaba’s e-commerce platform in China in July 2017. We collect data on product returns both before and after the rollout of livestreaming from a leading retailer. Our analysis, using a difference-in-differences approach and an instrumental variable approach, shows that while livestreaming increases sales by 107% in value and by 120% in quantity, it also leads to a 142% increase in the value of returns and a 102% increa...[ Read more ]

Livestreaming is transforming the e-commerce industry by enriching consumers’ online shopping experience and boosting sales. However, anecdotal evidence suggests that livestreaming may also increase product returns. To explore this issue, we study the impact of livestreaming adoption on product return rates using a natural experiment: the introduction of livestreaming on Alibaba’s e-commerce platform in China in July 2017. We collect data on product returns both before and after the rollout of livestreaming from a leading retailer. Our analysis, using a difference-in-differences approach and an instrumental variable approach, shows that while livestreaming increases sales by 107% in value and by 120% in quantity, it also leads to a 142% increase in the value of returns and a 102% increase in the frequency of returns. We identify impulsive buying as a mechanism through which livestreaming increases product returns. Moreover, we show that the information effect and streamer effect can potentially reduce impulsive buying in livestreaming. We draw related theoretical and managerial implications.

Keywords: livestreaming, product returns, impulsive buying, channel introduction, e-commerce